For most couples, their house is the most valuable asset they own. So, when they divorce, what happens to the house? How can you be sure what the house is worth? Regardless if one of the parties chooses to stay in the house, an accurate valuation must be done before the assets can be decided. There are three ways most commonly used to determine the home’s value.
If neither party wants to remain in the home after the divorce, the easiest and least complicated way to determine the value is to list the house with a realtor and sell it. In this case, the parties would divide the costs associated with selling the house, such as any closing costs, realtor fees, staging, cleaning, etc. and then evenly divide the proceeds. However, this option does not work for everyone. If one party wants to remain in the home, the option could be for them to “buy out” the other party, but first, the home’s value must be determined.
Comparative market analysis (CMA)
A comparative market analysis is a tool used by realtors to determine the value of the home. They compare the home with others in the same general area with similarities such as the same number of square feet, number of bedrooms and bathrooms and other features that would increase the home’s value, such as a pool, additional outbuildings or acreage. They will use current listings or research recent sales.
Comparative market analysis is an excellent option if your home is being listed for sale. However, if one party plans to remain in the house, the value may not be correct. Generally, home listings are usually inflated to give the seller some bargaining power when prospective buyers make an offer. Usually, a realtor will provide a CMA at no cost, hoping you will list the home with them.
Residential appraisers are licensed to determine the value of homes based on values instead of comparison to other homes in our areas. An appraisal usually comes in lower than a CMA and is more expensive, often costing several hundred dollars. If a comparative market analysis and an appraisal are submitted to the court, generally, the court will recognize the home appraisal over the CMA.